Davos 2023: U.S. Consumers In ‘good Shape’ As Wages Grow -BofA CEO

By Lananh Nguyen and Noor Zainab Hussain

DAVOS, Switzerland (Reuters) -U.S. consumers are still in “pretty good shape,” even as the Federal Reserve raises interest rates to tame inflation, Bank of America Chief Executive Brian Moynihan told Reuters during the World Economic Forum’s (WEF) annual meeting.

“The consumers are spending, their wages are growing and frankly, there’s still a lot of stimulus,” Moynihan told Reuters in an interview in the ski resort of Davos, Switzerland.

The U.S. economy could enter into a mild recession later this year or next year, he said, adding that for the rest of the world, the bank has predicted growth.

Wall Street’s biggest banks have stockpiled more rainy-day funds to prepare for a possible recession, while showing caution about forecasting income growth given the uncertainty over the Fed’s interest rate policy.

Moynihan and other business executives met with a group of U.S. Congressional leaders in Davos, he said, without specifying the participants.

“It was bipartisan, and it’s good to see them here,” he said. “They want to listen, they want to hear what’s going on, and they can also get a feel from the international business community about how the United States was perceived in terms of a place to invest, and it’s very positive right now.”

Moynihan is a proponent of stakeholder capitalism, defined by WEF founder Klaus Schwab as a model in which private corporations act as “trustees of society.” Some social and green activists are critical of the event for its exclusivity, cost and environmental impact.

“Capitalism is the system that will drive the best outcome, and so we believe in profits and purpose,” Moynihan said. “We believe in stakeholder capitalism,” he added, pointing to the bank’s record earnings alongside its rising wages and a raft of employee benefits across childcare, health and education.

Bank of America is balancing its staffing and compensation levels in contrast with other Wall Street banks that have laid off thousands of people.

“We’re seeing turnover slow way down and get back to more traditional levels — and that allows us to slow down our hiring and maintain the headcount,” Moynihan said.

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(Reporting by Lananh Nguyen in Davos and Noor Zainab Hussain in Bengaluru; Additional reporting by Niket Nishant; Editing by Mark Potter and Alexander Smith)